Are Indian Warehouses Leveraging Automation This Festive Season?

Ecommerce has obviously heightened consumer expectations when it comes to delivery services. As consumers have become accustomed to significant discounts on ecommerce platforms, they are now less willing to pay extra for fast delivery, which places additional financial strain on warehouse operations. These pressures on warehouses are further amplified during festive seasons, prompting an uptick in the adoption of automation.

RedSeer, a consultancy based in Bangalore, actively tracking over 100 platforms that account for 90 per cent of online sales, foresees that virtual shoppers are on track to spend a staggering USD 11 billion in the period leading up to mid-November (festival season). This projection reflects a near 20 per cent increase compared to the previous year.

Amazon has reportedly witnessed a remarkable 95 million customer visits during the initial two days of the 'Great Indian Festival 2023' campaign. Meanwhile, at Flipkart, the sales of electronic products, lifestyle apparel, and furniture surged by seven to ten times when compared to the period before the festival.

“During sudden spikes in demand, warehouses can efficiently reallocate employees from routine tasks to more critical roles, ensuring optimal utilisation of human resources. This adaptability is key to meeting changing demands effectively and efficiently,” says Aaron Jones, President & CEO at Bastian Solutions.

But how is automation being leveraged by warehouses across the country to support the festival surge? According to a CII-Alvarez & Marsal report, organisations in India are increasingly turning to Grade A warehouses with high levels of automation and advanced technologies.

“Warehouse Automation combined with sophisticated Supply Chain demand sensing engines, helps manage demand spikes during festive rush. It makes processes more efficient and proactive by automating tedious, repetitive manual tasks. This enables employees to focus on more complex tasks.” --Satish Pai, Partner and Leader – Operate services, Deloitte India

Grade A warehouses are becoming increasingly attractive due to their advanced technology, efficiency and space optimisation. Their ability to provide fast and reliable services while remaining cost-effective gives organisations a competitive edge in the market, making them vital for addressing the evolving demands of modern businesses, especially in the ecommerce and logistics sectors.

“In India, Grade A warehouses are expected to expand at a CAGR of 12.5 per cent culminating in approximately 324 million square feet by FY28. This robust growth is poised to drive a surge in automation within the warehousing sector,” said Manish Saigal, Managing Director, Alvarez & Marsal and Co-lead of the India Business Transformation Services practice.

Further, the absorption of Grade A warehousing by the ecommerce industry is poised for a robust increase, with an expected CAGR of 22 per cent. Similarly, the retail sector is also forecasted to experience significant growth, with a projected CAGR of 12 per cent during the period from FY23 to 2028 end.

But automation is easier said than done for warehouses. Presently, most warehouses in India fall within automation Levels 0 to 2, where Level 0 involves entirely manual operations and Level 4 signifies full automation. Level 3, marked by partial or island automation, is currently infrequent, indicating room for further automation adoption in India.   

Currently, ecommerce, 3PL, retail, FMCG and automotive sectors are at the forefront of automation adoption.

A CII-Alvarez & Marsal report forecasts that around 80 per cent of Indian warehouses will incorporate some form of automation by the year 2030.

Sandeep Uppal, co-founder & Managing Partner at Acuvon Consulting, emphasises the challenges of warehouse management for organisations, particularly in handling a high volume of orders. He notes that inefficiencies and inaccuracies often result in concerns, including high inventory levels and increased warehousing costs. "It's not just the intricacies of the tasks within a warehouse that make it difficult, but rather the cumulative impact on the processing of a high volume of orders." 

But he opines that the level of automation will grow fast in warehouses which would help companies optimise their processes. Uppal also highlights the rapidly evolving landscape, with companies successfully processing millions of orders during peak periods, such as the Diwali week. 

“So, when you receive a parcel this Diwali, it is highly possible that it was only handled by machines and robots in the warehouse,” he says.